by Gary Murphy
A more deplorable performance it would be hard to imagine! How well founded were the apprehensions that the State Department had not got the men of the calibre necessary to pilot the European Recovery Project through the Congressional committees … Marshall passed the buck to Thorp who proceeded to make a fair ‘haymes’ of the issue … Thorp gravely misled the committee about Ireland.105
The misleading, however, was not all on the US side. A speech by the Irish vice-consul in New York, Frank Coffey, to the Jersey City Lions Club on 16 March 1948 caused pandemonium back in Dublin. While defending Irish neutrality in the Second World War, Coffey asserted that:
… under the scheme which is at present before Congress, Ireland would receive only a dollar loan. No aid on a grant basis would be given … I should like to impress upon you that in giving us a loan you will not be taking very much of a risk. Ireland is one of the few countries today which is not in debt. On the contrary Britain, as a result of our exports during the war owes us approximately two billion dollars. There is thus nothing at all unreasonable about lending money to Ireland.106
Coffey went on to place Ireland at the heart of Western Europe, stressing how important a role a united Ireland could play in the revitalisation of Western Europe. He ended his speech in ringing terms, proclaiming that:
The revitalisation of Irish agriculture is part of the great effort to save Western Europe from economic and political ruin … An Ireland free and united from shore to shore may still prove to be a decisive influence in the destiny of Western Europe. Ireland has had a long and troubled night, the dawn at last is here, she has risen to the sunlight of a glorious day.107
Two days after Coffey’s speech, the Department of External Affairs cabled Washington:
Press report Coffey as saying in speech, New Jersey, answering criticism of Ireland in relation to ERP that we do not want grants but loans. As this is the reverse of the real position please cable whether he has been correctly reported.108
Washington replied that Coffey had indeed been quoted correctly, and a copy of his speech was sent to Dublin.109There is no more correspondence in the file relating to this issue until two weeks later, when Washington again wrote to Dublin; the communication maintained that ‘no doubt he was misled by the statement made on the same lines by Thorp of the State Department’.110The embassy in Washington was also worried about another aspect of Coffey’s speech, which had wider foreign-policy implications than his stated position on the Marshall Plan: in his speech, Coffey had made reference to Russia’s veto of Irish membership of the United Nations (UN) in 1946:
We are rather proud of Russia’s opposition in this instance for we feel it is indicative of a realisation that the Irish delegates to the United Nations would ever be on the side of liberty, justice and international morality and that our membership would be yet another voice contributing to the condemnation of totalitarianism and aggression.111
The embassy stated to Boland that Coffey’s statement ‘about Russia’s objecting to our admission to the United Nations is rather strong for a vice-consul’.112Coming some fourteen years prior to Michael Moran’s celebrated speech, when the then Minister for Lands argued that ‘neutrality [between communism and freedom] is not a policy to which we would even wish to appear committed’, Coffey’s words seem remarkable for a relatively junior External Affairs official.113Although he was speaking in the US on the day before St Patrick’s day, his words nevertheless offer an indication that there were those within External Affairs who placed the Marshall Plan in the wider perspective of West-versus-East, and who had little doubt as to where Ireland should stand. It is also significant – as Diarmaid Ferriter points out – that George Garrett erroneously believed that the Irish state was as vulnerable as any other country to communist infiltration owing to the economic depression, despite its seemingly impeccable anti-communist credentials.114
Early June saw frantic activity on the question of a loan. At a meeting on 1 June of Government officials dealing with the European Recovery Programme, J.J. McElligott, secretary of the Department of Finance:
… thought that with the future course of the ERP uncertain because of the interaction of American politics there were grounds for bagging all we could now. It would not be essential to take the whole of the $10 million offered and he had in mind we might take a lesser sum. He admitted that possibly some tactical advantage might be lost by taking a loan in face of our very recent protestations of our inability to repay and our moral rectitude in financial matters. The point was also made that to take a loan might prejudice the possibility of a reasonable grant allocation in future quarters. Not to take a loan would, however, be inconsistent with our stand against drawing on the sterling area pool.115
The following day, the Irish Press reported that the position on Marshall Aid was that under Fianna Fáil, whatever aid Ireland received under the ERP would be by way of grant, ‘but that something happened … which altered the picture and resulted in the decision that the $10 million earmarked for Ireland for the current quarter should be granted by way of loan’.116This sent the Department of External Affairs into something approaching apoplexy: ‘the suggestion implied in the Irish Press article that the determination for the present quarter was the result of something done or omitted to be done on the part of the Irish Government is wholly unwarranted’.117While the Irish Press was obviously a Fianna Fáil-supporting paper and had, as part of its agenda, a need to attack the Inter-Party Government as often as possible, its comments highlighted the apprehension that existed within Government circles, both political and administrative, on the loan-versus-grant issue. Although the Fianna Fáil Government had not been given a firm commitment to the effect that Ireland would receive a grant, the failure of the Inter-Party Government to secure a grant as distinct from a loan would leave it in a precarious political position and open to all manner of attack by the opposition and its supporters in the press.
When the news eventually came that Ireland was to receive a loan, MacBride quickly went into action, flying to New York and warning that the Irish Government might not be able to participate in the ERP as it did ‘not like entering into obligations that we see no prospect of being able to meet’.118While the US, to an extent, wanted to include Ireland in the Marshall Plan – believing that Ireland had the potential to aid European recovery by producing more ‘food for export’ to Europe, thus reducing America’s burden – they were unimpressed by MacBride’s bravado. Despite intensive lobbying by MacBride, it was clear by June 1948 that the chances of any sort of a grant were slim. J.O. Brennan of the Irish embassy in Washington wrote to Boland on 15 June outlining a conversation he had had with Hoffman on the loan/grant question:
He emphasised again that Ireland was, in his opinion, a loan-country and much though we had his sympathy and as personally inclined as he might be to accede to our desire for a grant, he felt that as administrator of this investment-banker business – ECA – he could not conscientiously tell me that we would be given a grant. He went on to say, in reply to a question from me, that if we declined a loan ‘that would be our funeral’, because there were any number of other people to accept the money if we failed to do so.119
Chickens come home to roost?
Alan Milward suggests that Ireland failed to be awarded grants in the plan’s first year because of its neutrality during the war, with Washington showing little ‘sympathy’ for the Government’s position.120Moreover, de Valera and Fianna Fáil did not have a monopoly on grievances over partition; MacBride had campaigned vigorously in the first half of 1948 to persuade the ECA not to acknowledge the partition of Ireland in the allocation of aid. This also made little impression on the Americans, but MacBride continued to harbour hopes that the OEEC might emerge as a genuinely supra-national organisation and evolve into an apparatus within which partition could be ended.
MacBride was also coming under increasing pressure from his own party on the partition question. J.P. Brennan, for instance, har
angued MacBride in the Dáil on the question of the interlinking of Marshall Aid and partition in March 1948, and asked for a reassurance that at a meeting of the OEEC to be held on 14 March, MacBride would not discuss:
… any political matter other than economic until (A) the partition of the country will have been solved to the complete satisfaction of the people of Ireland, and (B) opportunities for freedom of speech will have been conceded to the inhabitants in the territory of Northern Ireland.
Considering that no progress had been made on partition since the foundation of the state, it was questionable whether any Irish minister could discuss political matters on the international stage at all if Brennan’s maxim was to be held. In any event, MacBride replied to the demand by deflecting the political ramifications of the acceptance of Marshall Aid:
The matters to be discussed at the resumed meeting of the OEEC on March 14 appertain primarily to the economic sphere. In so far as the Deputy’s question is intended to elicit the Government’s attitude to the partition of our country, I should like to add that the Government regards the continuance of partition as the most significant obstacle to the political and economic welfare of our people.121
MacBride’s use of the word ‘primarily’, however, can in essence be seen as a tacit admission that there was a link between politics and economics contained within the Marshall Plan.
MacBride’s political problems masked to an extent the ongoing administrative row between the Departments of External Affairs and Finance during these months. For External Affairs, the ERP had huge importance for Ireland both economically and politically. In a submission to the Government towards the end of April 1948, the department pleaded for more staff as it was ‘unable to reply to important communications from the US Government as promptly as we should’, and ‘any inefficiency, delay or lack of attention in dealing with the ERP may have very serious results for our national economy’.122External Affairs also asserted that without Marshall Aid, Ireland would find it practically impossible to obtain most of its requirements from the dollar area, whereas with Marshall Aid, the country would be able to obtain the raw materials and capital goods it required. Moreover, it argued that Marshall Aid, properly administered, would enable the Government to develop foreign trade – essential, given the vast surplus of Irish imports over exports – and absorb both the capital and labour that Ireland was exporting. Most important of all, according to External Affairs, was the political dimension:
From a political point of view, ERP is of great importance as it is the first time that so many nations in Europe have banded themselves together for the purpose of complete economic co-operation. It is intended that the organisation should continue after the four years of American aid under the Marshall Plan. It is also the first time that Ireland has had an opportunity of co-operating in an international European organisation in which the members of the British Commonwealth of Nations were not also participating.123
For a few dollars less
On the other side of the administrative fence, both Joseph Brennan – the acerbic governor of the Central Bank – and J.J. McElligott – the equally combative secretary of the Department of Finance – argued against accepting any form of aid unless it was given in grant form. Dollars, they argued, could not be repaid as Ireland earned too few of them. At one stage, McElligott remarked to his minister that ‘we cannot expect any measure of salvation from the so-called Marshall Plan’.124Moreover, both Brennan and McElligott were concerned that the expansionary Department of External Affairs had too much control over the ERP process. McElligott wrote to Boland outlining Finance’s worries after Boland had circulated a memorandum in which he argued that all ERP issues should be co-ordinated through External Affairs:
It seems inherent in your proposals that the Minister for External Affairs should assume all responsibility vis-à-vis the Government in relation to European Recovery Programme matters. We are here, as you know, in favour of you playing a preponderant role in regard to ERP in view not only of the position of your Department but of your own special knowledge in regard to the matter. But I presume your memorandum does not mean that no Department should approach the Government on a subject relating to ERP except via the Department of External Affairs. Occasion will arise when interests of the Minister of Finance are paramount and it seems to me desirable that he should be the vehicle for the submission of all proposals and memoranda of a financial character to the Government, subject of course to prior consultation with other Ministers concerned.125
Finance had no real idea as to what should be done with Marshall Aid other than using it to reduce the national debt, and essentially opposed it on the grounds that politicians would squander the money on inflationary expenditure. As Patrick Lynch has pointed out of McElligott:
While he was extremely able and great credit is due to him for the benefits he conferred on the country, he was very cynical. He distrusted politicians and believed that their sole aim was to impose a bigger role in public spending for taxpayers’ money. He saw the role of Finance as to reduce expenditure and while he was successful in this, his thinking was unduly influenced by Whitehall. In those years, Merrion Street was like a small Whitehall. It believed that financial policy should travel absolutely in line with British thinking.126
Seán Cromien has also talked of Brennan and McElligott’s belief that politicians of the two main parties were extravagant spenders:
Both of them were non-political and that is why they took offence when politicians disagreed with them. Brennan was particularly bad. There was a saying about him that when he used go to visit the Minister for Finance ‘gloom followed as he walked along the corridor’. He was known to be gloomy and had no vision at all. In essence he stayed on too long.127
Cromien recalls both Brennan and McElligott as being very wary of Marshall Aid, and appalled at the idea that it eventually came in a loan form: ‘both found the idea of Americans trawling through the civil service and demanding masses of documents detailing how we were going to spend Marshall Aid as abhorrent’.128External Affairs, however, did not see the Americans in the same light. Boland recalled that:
[The] Americans appointed in each country what was called a technical advisor, but he was really a supervisor to see to what extent we were carrying out the plan … We had a fellow called Carrigan who was Professor of Agriculture at the University of Connecticut, or some place like that [he was actually dean of the University of Vermont]. He was a thoroughly decent fellow; we never did things without asking his advice. So the thing went on; we got through the thing all right. By the time it was finished, I was on the way to London.129
In any event, by December 1948 McElligott was telling his minister, Patrick McGilligan, that loans were a more preferable option than grants, as ‘you are subject to less snooping by the Americans’.130
In essence, the Department of Finance’s decision was related to its agreement with the British Treasury to do everything possible to reduce the strain on the sterling pool. A year later, Finance was continuing to question the validity of Marshall Aid. This time the attack came from Whitaker when he wrote a scathing critique of expansionary policy, focusing on the dangers of using such aid to fund new spending programmes. Insisting that the level of public debt was a direct result of excessive social expenditures, Whitaker asserted that taxation was too high and a disincentive to private enterprise, and claimed that infrastructural and industrial expenditures were also too high.131Whitaker has since recalled that ‘Marshall Aid was not the beginning of planning in any systematic sense but the pursuit of an indigenous experience to get the right result’.132For him, at this stage, the right result was that Marshall Aid would be used to ease the public debt, not fund an increase in socially productive spending. George Duncan, professor of economics at Trinity College, Dublin – and of the same classical school of economics as Brennan and McElligott – succinctly summed up the taxation problem facing the country in a lecture in May 1950 to the Dublin Chamber
of Commerce:
[Firstly] concealed taxation is found in every state, but in a small and highly protected state like ours it is of much greater relative significance. Secondly average income here is lower than in many neighbouring countries, some 117 [pounds] per head as compared with 200 per head in the United Kingdom and a given percentage extraction is more painful at the lower level. Also a large part of that income accruing in kind to farmers is not amenable to taxation and the burden falling on the rest is correspondingly increased.133
Thus, for Whitaker and his colleagues in Finance, it seemed sensible that Marshall Aid be used to ease public spending and reform the taxation system rather than becoming simply a spending tool for the authorities.
Marshall Aid, though it did fall well short of what the Government and particularly External Affairs hoped for, was eventually to account for about 50 per cent of total state investment during the Inter-Party administration. Over the total period of the ERP, Ireland received $146.2 million, made up of $128.2 million in loan aid and a rather measly $18 million in grant aid. Brian Girvin has argued that this result shows that Irish diplomacy in respect of the Marshall Plan was, to say the least, misjudged if not actually incompetent.134Yet for External Affairs, the Marshall Plan and the monies it provided had to be seen in a wider political context.
Beyond the interdepartmental and political nexus, the plan was condemned by the radical socialist, Peadar O’Donnell: writing in The Bell, he complained that Marshall Aid was part of a capitalist Pax Americana. Ireland, O’Donnell wrote, should ‘remedy underdevelopment and stand for peace, or failing peace, neutrality, [rather] than … seek alms and surrender to war plans on which we can have no influence’.135While this was precisely the communist line at that stage of the Cold War, O’Donnell’s was a lone voice in the Irish wilderness.